Special report:

The Murdoch succession

Family affair

Investors are fretting about who will succeed Mr Murdoch

ON TOP of its strategic challenges, News Corporation faces the tricky question of who will take over from Mr Murdoch. One view is that his eventual departure will be followed by a break-up of the company, because it consists of his particular choice of assets and may prove too unwieldy for anyone else to hold together.

So far, Mr Murdoch's plan to pass control of News Corporation to one of his children is going badly. Last year his eldest son, Lachlan, left the business after losing a power struggle with other (non-Murdoch) senior executives, and his daughter Elisabeth abruptly left BSkyB in 2000. Now only James, at 33 the youngest of his adult children, remains in the business—he is currently chief executive of BSkyB.

Does James want the burden of running the whole company? Executives at News Corporation reckon that he has the necessary ambition, and he has won the respect of shareholders. But with no experience of running any of News Corporation's big American divisions, it is hard to imagine James taking over soon. Investors expect that if anything happened to Mr Murdoch, or if he stepped down, Peter Chernin, the group's chief operating officer, would take over.

Meanwhile, Mr Murdoch has failed to see off John Malone, boss of Liberty Media, whose 18% voting stake is not far off the 29.5% that the Murdochs collectively own. In 2004, to the dismay of shareholders, News Corporation's board agreed to a poison-pill defence to prevent Mr Malone buying more voting shares. Eventually, Mr Murdoch hopes to overcome the impasse by buying back Mr Malone's shares in return for one or more of the group's assets. “We're waiting on him to come up with a scheme that will satisfy his tax issues,” Mr Murdoch says. He rejects the possibility that Mr Malone intends to grab control of News Corporation. “He's a great financial engineer, but he doesn't have the management,” Mr Murdoch says.

For the moment, News Corporation intends to keep its poison pill, even though investors dislike it. News Corporation argues that senior people at big fund-management firms do not have a big problem with the poison pill, and that it is only corporate-governance specialists who are making a fuss. Perhaps, but the company would doubtless like more fund managers to buy its shares. Many will not do so until the poison pill is gone and there is clarity about who will end up in charge.